Survival Update

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Survive Buying a Car, Part 1 of 2

Life is full of experiences that might be best described as ordeals. Swimming with dolphins may be cool but swimming with sharks? … Maybe not so much.

And yet, thousands of regular people all over this great land swim with sharks every day – car sharks, that is. Certainly, not every automobile salesperson is a person who is skilled at deceiving others, but enough of them are to give the lot a bad reputation.

In their own defense, sales staff generally must move products or die – get fired, that is. There are plenty of other eager beavers waiting in line to get that plum desk job, after all.

As a consequence, people who represent a new or used car dealership sometimes play hardball with their prospective customers, making sweeping statements and uttering promises that turn out not to be entirely true after a visit to the finance department.

Here are some tried and true ways to hold your own during a vehicle purchase negotiation. Find out how you can save big bucks just by knowing a thing or two before you go forth to find your new set of wheels.

  1. Research and Budget

Unless you have money to burn, begin your car quest from the comfort of your own home. Start shopping for cars with features you like online or through local auto trader publications. Line up several acceptable makes and models so you don’t get locked into a “must have this one” mentality. More choices lead to better deals.

Start by visualizing and finding your dream cars and then apply the budget filter. The budget filter is a realistic way of looking at life that is rooted in the reality that most of us live on a fixed income such as a paycheck. How much extra cash do you have each month and how much, if any, additional debt do you want to take on?

There’s no point setting up car payments if the repo dude is going to show up and tow your ride away after you fall 90 days in arrears.

  1. Cash or Credit?

There is a psychology to all sales that is crucial to understand if you want to play to win and get lower prices and better deals. You must be in control of the situation rather than let a sales shark drive the deal home – so to speak.

Hands down, the best way to buy a car is with cold, hard cash. The benefits are two-fold: 1) You won’t go into debt. 2) There is a profound psychological reaction to waving a bunch of $100 greenbacks in a seller’s face. That reaction is greed and the lust for money.

I know this because I went to buy a car sold by the mother of a son who was overseas. She really wanted to get rid of what she considered her son’s responsibility. The price had been lowered to $1900 (this was many years ago when you could get a credible car for that little). I showed up with 19 $100 bills: 16 in my purse ready to grab and 3 others tucked away out of view.

When it came time to seal the deal, I took out the $1600 and fanned the bills open. Holding them up right in front of “mom’s” face, I asked her, “Would you take $1600 cash?” She hesitated only slightly, and her face twisted just a little bit. I could see her thinking hard. “Sure,” she said. [swish]

In that situation, I was prepared to pay the $1900 reduced asking price but gambled on the mother’s desperation to clear out her son’s property. That wager paid off – literally – in a $300 savings.

All that said, after applying the budget filter, many people discover that they want more car than their monthly income can cover. Vehicle financing offers the solution – but tread very carefully.

Take on as little interest-bearing debt as possible (always) and be prepared to bargain for lower rates – more on that later. Ponying up even half the cost of your new car in cash will save oodles of money on loan interest for an object that could lose one-tenth of its value within a month after it is driven off the sales lot.

If you expect you’ll need to borrow some money to help pay for your car purchase, get pre-approved for a credit union car loan. You can’t beat the low-interest rates and fair terms offered by member-owned credit unions.

  1. Know the True Cost of Ownership

Know now, too, that you will pay not only the purchase price, taxes, and fees for your new vehicular acquisition, but you will also bear the cost of future upkeep. Some cars are “higher maintenance” than others – just like people.

When I visited my town’s local Mercedes-Benz dealership, full of hope and optimism that I could actually afford to own such a fine machine, I asked a sales rep to pop the hood on one of those babies. Peering inside, I asked where the oil and oil filter were located so I could do my own oil changes.

The rep looked at me as if I had a horn growing out of the middle of my forehead and said, “Oh, you don’t do the oil changes yourself. You bring the car in here for that.” “Cha-CHING!” went my brain, as it racked up all the money this outfit must be making on DIY jobs like this. (I wound up buying a very affordable Honda hatchback.)

<link> Part 2</a> of this two-part article reveals the rest of these survival tactics for dealing with the ordeal of buying a car – so stay tuned!